Unions criticise AA owner Acromas for paying 2.7pc corporation tax

Unions have criticised AA owner Acromas for paying corporation tax of just
2.7pc since it was founded in 2007, after a week in which Starbucks, Google
and Amazon were made to give evidence to the Public Accounts Committee over
their tax affairs.

The AA is one of Acromas's key brands, along with Saga. Other brands include BSM, Titan Travel and Allied HealthcarePhoto: Alamy

By Telegraph staff

8:53AM GMT 18 Nov 2012

The public equity company also owns Saga financial products, and its figures show that it paid £67.1m over its five-year history on operating profit of £2.49bn and turnover of £8.75bn. Corporation tax is currently set at 24pc in the UK but is thought to be due a fall to 23pc next year.

Regional secretary of the GMB union, Paul Maloney, told The Observer this morning: "The Chancellor should use this example to end tax relief on private equity loans, which is skewing the corporate sector towards borrowing rather than equity, and leading to an erosion of the tax base. The loss of tax has been huge.

"Taking advantage of this tax relief is what drives private equity. It has led to excessive leverage across the economy in the likes of the AA, Southern Cross, Four Seasons Healthcare, pub companies and Boots as well as a loss of tax.

"There is now a wall of debt of £111bn that buyout companies in the UK will have to refinance over the next five years."

Acromas is looking to sell the AA , but has been able to offset profits with interest payments on the debt originally used to buy the company.

An Acromas spokesman told The Observer: "We pay all our taxes in the UK. Overall, our operations paid over £300m in taxes of one kind or another."

Chief executive Andrew Goodsell said in the company's latest financial results: "Our financial strength means we have been able to acquire complementary businesses. Our record level of investment has been funded from the cash our business generates."

The fiery exchange, led by Public Accounts Committee chairman Margaret Hodge, saw all three companies accused of siphoning profits away from Britain by using a complex web of accounting strategies that were cynical and “unjust”.

“We are not accusing you of being illegal,” said Mrs Hodge, “we are accusing you of being immoral.”